Business Advice from a Billionaire

Photo: shareski

“What do you think, Julie Ann?” was posed to me in a school administration building in downtown Charlotte, NC where I appeared with my dad for a plea to attend the high school of my choosing. Having endured the endless, chaotic crossfire of school integration, an odyssey with school lines drawn and redrawn in perpetuity to achieve racial balance and ever-elusive school equality, I didn’t think anyone, especially school board members, would really care what a 15-year-old girl thought. I knew him only as the one who asked my opinion.

Many years later, I heard an apparel company executive refer to him as someone who had “more money than God” and more years still, as one of Forbes’ richest people in the world. His net worth is pegged at over $2 billion and unless you hang around North Carolina (USA), you’ve probably never heard of him. But he’s got some business advice to pass along and I thought I’d summarize it for you here.

His name is C.D. (Dick) Spangler Jr. and he’s currently retired but has had numerous business ventures. In addition to being a member of the Charlotte-Mecklenburg Schools board (where we met), he also served as President of the University of North Carolina system.

Here's a recap of his education and career, based on an interview with Mr. Spangler that appears on the Harvard Business School (HBS) Entrepreneurs site:


  • BA, University of North Carolina-Chapel Hill
  • MBA, Harvard Business School

Career Timeline (highlights):

  • Growing up, helped with his dad’s construction firm, which was started during the Depression
  • Took over and ran the family business of developing property into neighborhoods and building homes but competition was fierce and margins slim so exited that business
  • Changed business from single-family residential development to the design, construction, financing, and leasing of apartments and warehouses
  • Started designing, building, financing, and running motels; planned to go public but the major source of motel guests (the traveling salesman) dried up during the ’72-’74 recession
  • Joined the board of Bank of North Carolina (a bank his dad and others had started to obtain funds for construction and other projects) after it became insolvent due to mismanagement
  • Led bank turnaround from insolvency to its sale to North Carolina National Bank/NCNB, then NationsBank, now Bank of America

There were other investments in publicly-held and private companies, such as the one that my business acquaintance ran. It seems that his dad’s entrepreneurial spirit and money ignited the spark of business ownership and investment for Mr. Spangler, which led to significant wealth.

Here’s business advice taken from the interview (transcript in PDF):

1: Make your mistakes when you’re young so you can learn and recover from them.

“There is a learning curve in making decisions, and making your bad decisions when you’re young gives you time to outlive them.”

I like the way Mr. Spangler assumes you’re going to make mistakes. He tells a story of one of his first days at HBS in which a classmate is berated for not making a decision despite the fact that enough information is available. The approach instilled by his professor is to determine alternatives and choose the best one.

Getting feedback (immediate and longer term) from real-life choices can enable you to develop a decision-making model. Even so, at some point, you may make a bad decision with negative consequences; if you’re young when you make mistakes, you can recover your losses and use your new-and-improved judgment to yield better results.

2. Leverage wisely.

“We were very highly leveraged, but there was nothing particularly wrong with leverage since the properties were well located, the rents were low, and the interest rates were very low.”

Here’s the idea: borrow at interest rates that allow you to invest in a business that will deliver returns higher than the interest rate. (Nora covered leveraging in an earlier post: Borrowing to Invest:Helpful or Hurtful?)

There’s an implication that leveraging can be foolish. In this scenario (borrowing at low interest rates to build apartments and warehouses, offered at attractive rental prices in good locations), the cash flow from rent income seemed to be nearly guaranteed and the good location meant not only steady rental income but also long-term prospects for resale.

You won’t always know if an investment will yield higher returns than your borrowing rate but a good sense of where interest rates are heading and knowledge of market conditions will help you to make leveraging decisions.

3. Know what the worth of the business (or item) that you want to sell.

Mr. Spangler turned around an insolvent bank (Bank of North Carolina), generated a positive income stream, and got it ready to sell. He didn’t want to be a banker but did want to get a good price for his shareholders. He researched the going price of banks and found the typical formula for bank acquisitions: Price = 1.8 x book value or assets. (See my discussion on bargaining by knowing the worth of an item.)

Though he planned to sell the bank, he was taken aback by an urgent visit from Hugh McColl, then president of NCNB-now Bank of America, who traveled via a private plane to the West Virginia mountains where Spangler was spending a couple of days with his family. Their conversation went something like this:

McColl: I’ve been authorized by my board to buy your bank. What’s the price?
Spangler: 1.8 times book.
McColl: That is a little high.
Spangler: I don’t think it’s high because that’s what banks are selling for.
McColl: Well, I was told to tell you that was too high…let’s work out the details.

Mr. Spangler’s stake of Bank of America are now worth over $1 billion (based on November 27, 2007 market price for 32 million shares).

4. Get rid of lousy leaders and ineffective managers.

“…when people are making mistakes in running an organization, they should no longer be part of that organization.”

Note that Mr. Spangler says to get rid of the ones who are running the organization not the people who are working for the organization.

6. Hire people who are smarter than you, especially those who have talent in specialized fields.

“People sometimes have difficulty employing people who are smarter than they are. I think that’s a terrible mistake because you can still supervise people who are smarter than you are. As a matter of fact, every person you hire ought to be very good in a certain field and be brighter than you are in that field.”

If you are a hiring manager, you will likely feel safe with the people who aspire to be the best in their respective fields but have little interest in becoming CEO or even managing a department. You may be intimidated by those who want to advance and even avoid hiring them, which may be comforting in the short term but not beneficial in the long term. You want to create and/or work for the best organization possible so it makes sense to hire the best people.

7. Don’t hire or hang around people just like you are.

“You need to tolerate surface differences in order to help people focus their talents on what needs attention. One of the weaknesses of some people in administration is that they want people around who look, act, and think like they do. That’s a recipe for disaster.”

Mr. Spangler considers diversity (in thought, action, and appearance) not a corporate initiative but rather an essential to avoiding disaster and, by inference, to realizing success.

8. Prioritize your challenges.

“I’ve come to the conclusion that having a single problem is overwhelming. I think that having ten problems is easier to handle since you can move from one to the other as you make a little progress, take a break when you’re not exactly sure what to do, then come back to it…You also learn how to put things that are more important to the front of the line so that you spend less time on things that are less important, or you defer those things until a time when you can give it better attention.”

There are some problems that don’t resolve themselves within an hour or day or even a week, contrary to what I may have learned from watching television sitcoms. So, the idea of deferring a decision seems reasonable; I like the word deferring which connotes waiting until the right time as opposed to delaying, which may indicate unwillingness or inability to make a decision.

9. Look soberly at the numbers from the real world not what’s on your projections.

“…entrepreneurs…have a tendency to believe the projections on their spreadsheets rather than the reality of a situation….There’s a tendency to reject what the market is telling you in favor of what’s happening in reality.”

It’s disheartening to learn that your great business idea isn’t generating the revenue you thought it would and your operating costs are higher than anticipated. You realize that you may need to apply more effort or give the business more time to succeed. But if a concept is not accepted by the market and isn’t producing the income or returns you projected, then your plans and projections need to be adjusted.

10. Get financing for business ideas if you want to earn a return on your investment.

Entrepreneurs “should know that even if they have a wonderful business idea, if they don’t have financing, they won’t be able to turn a business into something that will deliver a return….Financial stability and reliable sources of financial support are essential.”

Now, I know many of you are thinking that you can start a business in your garage or basement, fund its growth from sales, and keep plowing money back into the business to fuel its growth; and, from one perspective, that seems like a pretty good idea. You keep your risks low and all profits go straight to you rather than investors/owners or the bank.

But there’s a difference between generating income that is equal to a salary and creating a business with an ongoing source of revenue not dependent on one person and with value derived from assets. If you have the right kind of financing, you can focus on generating sales and reaping profits rather than figuring out how to meet payroll expenses or fund inventory purchases to fill orders.

11. Let someone else be first to come up with a solution so that you can second it, and make everyone feel that you’ve made a good decision collectively.

“Being the quickest to have the answer is not necessarily a good characteristic. You may have the answer but it’s a lot better to let somebody else come up with the answer so that you can say, ‘I really like your idea…You know, what you said really makes good sense.’”

I’ve been in meetings and involved in groups where I’ve made what I think is a great suggestion, and no one seems to value my input. Later, either the same day or in subsequent conversations, someone else makes the same suggestion but now it is considered a brilliant idea. Still, if I am really part of the group, either as a member or leader, I need to be focused on moving forward and not worrying about who gets credit for the solution to a problem. Watch and see if ideas are more accepted when they are seconded rather than when they are first proposed.

12. Solicit the opinions of others.

“What do you think, Julie Ann?”

Forbes mentions that, as UNC President, Mr. Spangler often ate lunch with students to learn about campus life. Finding out what others think is a great way to divine the source of problems and often uncover solutions. I've heard this advice from many businesspeople (who talk with customers, visit factory floors to speak with production workers, etc.) but I thought it was worth noting that listening to other people, even the youngest and least influential, might help you become a billionaire.

Epilogue: In response to his question, I explained why I wanted to attend the high school closest to my home rather than the more prestigious high school in Charlotte's most affluent neighborhood to which I had been assigned (due to a recent change in school district lines); I was allowed to change schools the next day; last month, the C.D. Spangler Foundation announced a $4 million gift to Teach of America in Charlotte, NC in what seems to be a continuing desire to equalize educational opportunities in the public school system.

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Guest's picture
From Charlotte Too

Nice to get advice from a local leader.

Julie Rains's picture

Glad to see we have Southerners/North Carolinians as readers and commenters!

Guest's picture

Hey Julie,
Great Post!
I particularly liked "Being the quickest to have the answer is not necessarily a good characteristic." What a phenomenal suggestion.

Guest's picture
Minimum Wage

Silly me! I've been wanting to start my own construction company but didn't know how I was ever going to get the money. All I have to do is start a bank!

Guest's picture
Minimum Wage

What's number 5?

Julie Rains's picture

I guess #5 should be either "pay attention to details" or just "look at the big picture!" You know I have what I used to think of as a bizarre fear of numbering incorrectly, likely caused by multiple edits. There was one item that I was going to include but decided it was too complicated and now can't recall what that was (I'll let you know if I can remember as I discarded my original notes).

As far as construction companies and starting your own bank, I consider developers risk-takers who manage to envision possibilities that other people (like me who tend to think in concrete, no-pun-intended, terms) don't. Not that I think every spot on earth needs to be developed, which seems to be happening where I live, but I am still amazed by the ingenuity of developers.


Julie Rains's picture

what #5 was all about:

When the bank that his dad started became insolvent, Mr. Spangler approached the Federal Reserve Bank of Richmond about bailing it out via a loan of $65 million. The FRB should have been providing better oversight of the bank operations and there were some violations of banking regulations that went unchecked. When one of the execs asked Mr. Spangler to tell him why the FRB should help, he responded:

"Well, I wasn't there when Bank of North Carolina got in trouble, but you people were."

So, Mr. Spangler was asking for help and justifying his request because of poor regulatory oversight. I admit to having mixed feelings about government solutions: on the one hand, market forces should fix problems and prevent recurrence through self-regulation; on the other hand, the government has an obligation to protect people, especially the uninformed and uneducated. In this case, the bank paid back the loan from the Fed.

There could be some parallels between this request and the current government bailout. Philip has written some posts on this topic including Fixing the Foreclosure Crisis. Again, I have mixed feelings about government solutions: on the one hand, borrowers may not have been fully informed about the ramifications of their loans; on the other hand, borrowers and banks will never learn to make changes if there are no consequences for their actions.

At the time that I was writing this post, I was still wrestling with what I thought was right and still am actually but this seems like a great time to insert another business lesson: Hold people accountable for their actions.

Guest's picture

Great post - and brilliant advice from Mr Spangler. I love reading interviews with these type of people. They have years of experience and mistakes, and they're never too proud to admit where they went wrong.

Number 9 hit a nerve with me. I am just having to readjust my projections for the coming year, because the last ones I did were completely unrealistic.

And it's not easy - probably because you don't want to get to the end and realise that if you'd been more accurate to start with, you might not have invested in that particular business.

I guess the learning never really stops. We just hope that our mistakes become fewer and less painful.

Guest's picture

Billionaires are billionaires because people listen to them. When they advise you to buy stocks or shares, they increase in value.
Then the billionaire sells his.
Why on Earth believe that a billionaire has your interest at heart?
Just take a long hard look at the situation these friendly billionaires have left the US and its ordinary people in.
Then come back and tell me how great it is to listen to these fraudsters.
The Baldchemist

Guest's picture
Grace Cruz

I am emailing the billionaires to ask for advice. If I were eighteen years old I would love to hear all the advice they have to offer. But I am not eighteen I am a senior citizen trying to survive on eleven hundred and fifty dollars a month.I am not able to pay all my bills and every month I have to withdrawnal money from my savings account.

The reason I am not sleeping at night is because my
savings are almost depleted and I have no where to turn. My husband is disabled from a accident it had that cracked his back and his foot. So he is not able to work.

I am very ill with a illness called Fibromyalgia it is a disease that attacks all my muscles, tendons, and nerves though out my whole body. I am in pain 24/7. Also it seems with the sress of not being able to pay my bills and bill collectors calling all day and night my system is so weak I am in bed more so now a days.

I am on line every day and night trying to find some way of making a living doing whatever online and so far I have found nothing. I have even gone as far as going to some sites and begging for help. I am desperate because I had to cancel my health insurance and our 1993 van keeps breaking down and we do not have the money for the repairs. My daughter has help us with many of the repairs but she can no longer help us because she has her own family.

Should I get a flair up of my illness I will not be able to go to any hospital or doctor for help. If I do not find any help soon I am going to lose my home of twenty eight years. I just cannot believe that at age 63 I will be hopeless. I need a God send.

Guest's picture
Grace Cruz

I am a senior citizen who is about to lose my home of twenty eight years. What advice can they give me to save my home. My husband is disabled and I am severely ill. So I am unable to work as well.

Most of the Billionaires suggest to purchase stocks. I did purchase stocks before the market crashed. l started out sixty five thousand dollars and now it is down to six thousand dollars which we are living on.

My husband and myself receive thirteen hundred and fifty dollars a month. Our house payment is almost one thousand dollars a month. Our saving are almost depleted and I have no where to turn. I need a God send and I do not think the advice of a billionaire is going to save me my home and my life without health insurance.

It is very easy to have all the answers when you have billions of dollars. How can they give me advice before at age 63 I will become homeless.

Julie Rains's picture

Consider this: Mr. Spangler  listened to what other people had to say rather than dismissing them because of status or wealth (either lack of or plenty of).

Guest's picture

I especially like the piece of advice about hiring people that are smarter than you are. It takes a secure, and smart, person to understand the value of that. Thanks so much for sharing this information with the rest of us. As a business owner, I am always trying to educate myself on the best ways to remain successful.

Julie Rains's picture

I would suggest looking into local resources that may be able to assist with expenses (food and medical services) through community programs or social service programs.

Guest's picture

I guess that I am so desperate that I am begging for help. I have tried everything and I have not found any help at this time. I will not give up. I know that there is a kind hearted person that can step into my shoes and see themselves in this situation and think for the grace of God there goes I. One day you could find yourself in this situation and think how did this happen.This happened to us in 1994 my husband was in a terrible truck accident. He was on the very top of the load of his truck and the fork lift driver pushed one of the pallets and the pallet knocked my husband to the pavement below. He crushed his back and one foot. The doctor put steel screws and metal pins to hold his foot together and took bones from other parts of his body to replace the ones that were crushed.I am unable to work since 1986 when I found out that I have a severe illness called Fibromyalgia this disease attacks all my muscles,tentons and nerves though my whole body. I am in pain 24/7 all day and night. I also have no health insurance. So since 1994 we have been living off the funds from our saving account that is now is almost depleted.

This is happening to people every single day.I read many of these stories and my heart goes out to them. What can I do. If I should come into a large sum of money like winning the lottery I would help as many people as I could. I have alway's told my husband that I would like to help the homeless. I cannot believe in the richest country like ours that there are people sleeping in cardboard boxes. It is a shame and my heart breaks for them.